Saturday, October 18, 2014
I stand corrected...
Well, it's here. The dreaded pullback, correction, slump, value reset, whatever. Is it over? I guess we'll know when it's over and things are a ways past in the other direction. Interestingly, it doesn't seem so bad, now that it's happening. We're in the midst of earnings season. Most of my companies are reporting solid earnings. My utilities and REITs haven't budged. A few of my stocks have risen; utilities, KO, a few others. I'm not sure this correction has legs...jobs reports are ok, inflation apparently isn't heating up, Fed hasn't started to raise rates. I'm all in, and not anxious to sell anything to raise cash, so I'm sitting on my hands. Every quarter, my positions grow by 1% or so, in addition to new money flowing into the 401k. It's not clear to me that Syria, Ukraine, Ebola or any other event is likely to change the business climate for my large multinational companies or the American economy, so I can't see a reason to run to cash. Sit tight...that's right.
Saturday, October 4, 2014
Endless monitoring
I'm stuck in a hotel room, so I returned to my favorite internet pastime, reading financial blogs and monitoring my retirement portfolio.
Just for fun, I checked to see how yearly dividends are doing on each of my holdings. Very gratifying...issue by issue, with DRIP, the dividends keep going up. A few didn't, and I checked specifically on these. None are in trouble, none are worth selling, in my view.
I could tell that roughly speaking, I'm getting about 10% more in dividends this year than I did last year.
Since my companies pay 2-5% in dividends per year and I DRIP every one of them, that means that my positions grew by 2-5%, not counting new money invested. Dividend growth per share made up the other 5-7% increase in dividends. At this time new money accounts for about 5% in overall portfolio growth. Some of this is in bigger positions in existing companies, and some is in new positions established.
Capital value went up about 10% as well, but that number changes almost daily and I have sworn not to be a slave to the stock prices or the composite fluctuation in portfolio value. I did a bit of repositioning and it helped my overall yield a bit.
There's more re-balancing that I could do, but I'm not fully convinced that selling the best-performing companies to beef up on the laggards is really what I want to do across the board. Fortunately, I'm following no-ones rules but my own, so I won't be chastised for being less than entirely consistent in my behavior. The first step to changing bahavior is awareness of that behavior, and incremental changes are less disruptive and more likely to be durable than wholesale shifts, so I'm comfortable with the rate that I'm moving towards truly dispassionate portfolio management. Performance consequences are compensated by shoveling as much money as the law allows into my retirement plan.
I'm working towards a system where I keep a running count of my overall share-count, my overall dividend payment rate and the rate of change in those numbers. I think this may take my focus a little more towards where it should be than on the endless price fluctuations that occur daily. Now and again, it's important to examine values and ask if some rebalancing isn't in order, but a dividend growth strategy needs to focus on just that, and the forces that drive it. It starts with earnings and earnings growth. Then dividends and dividend growth. Reinvestment of dividends and new contributions makes up the rest. Pretty simple, huh?
Just for fun, I checked to see how yearly dividends are doing on each of my holdings. Very gratifying...issue by issue, with DRIP, the dividends keep going up. A few didn't, and I checked specifically on these. None are in trouble, none are worth selling, in my view.
I could tell that roughly speaking, I'm getting about 10% more in dividends this year than I did last year.
Since my companies pay 2-5% in dividends per year and I DRIP every one of them, that means that my positions grew by 2-5%, not counting new money invested. Dividend growth per share made up the other 5-7% increase in dividends. At this time new money accounts for about 5% in overall portfolio growth. Some of this is in bigger positions in existing companies, and some is in new positions established.
Capital value went up about 10% as well, but that number changes almost daily and I have sworn not to be a slave to the stock prices or the composite fluctuation in portfolio value. I did a bit of repositioning and it helped my overall yield a bit.
There's more re-balancing that I could do, but I'm not fully convinced that selling the best-performing companies to beef up on the laggards is really what I want to do across the board. Fortunately, I'm following no-ones rules but my own, so I won't be chastised for being less than entirely consistent in my behavior. The first step to changing bahavior is awareness of that behavior, and incremental changes are less disruptive and more likely to be durable than wholesale shifts, so I'm comfortable with the rate that I'm moving towards truly dispassionate portfolio management. Performance consequences are compensated by shoveling as much money as the law allows into my retirement plan.
I'm working towards a system where I keep a running count of my overall share-count, my overall dividend payment rate and the rate of change in those numbers. I think this may take my focus a little more towards where it should be than on the endless price fluctuations that occur daily. Now and again, it's important to examine values and ask if some rebalancing isn't in order, but a dividend growth strategy needs to focus on just that, and the forces that drive it. It starts with earnings and earnings growth. Then dividends and dividend growth. Reinvestment of dividends and new contributions makes up the rest. Pretty simple, huh?
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